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Incentives versus sorting in tournaments : evidence from a field experiment

Number of pages

22

Publisher

Amsterdam: Faculteit Economie en Bedrijfskunde

Document type

Working paper

Faculty

Faculty of Economics and Business (FEB)

Institute

Amsterdam School of Economics Research Institute (ASE-RI)

Abstract

A vast body of empirical studies lends support to the incentive effects of rankordertournaments. Direct evidence comes
from experiments in laboratoriesor from non-experimental sports events (golf, tennis). The short duration ofthe
tasks at hand or the lack of distractors may, however, limit the externalvalidity of the findings from these studies.
Moreover, non-experimental resultscan be biased due to (self-)selection. To address these concerns we conducteda
field experiment where the best performing student on the final exam of astandard introductory microeconomics course
could win a substantial financialreward. A standard non-experimental analysis confirms earlier findings.We find
however no evidence for effects of tournament participation on studyeffort and exam results when we exploit our experimental
design, indicatingthat the non-experimental results are due to sorting. The only exception isthat treatment has
a significant impact on attendance of the first workgroupmeeting immediately after the announcement of treatment status,
suggestinga difference between short-run and long-run decision making.

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